Good morning. My name is Lisa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Kinross Gold's acquisition of Great Bear Resources conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press Star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the Pound key. Thank you. I would now like to turn the call over to Mr. Chris Lichtenheldt, Vice President, Investor Relations of Kinross Gold. Chris, you may begin.
Thank you, and good morning. With us today, we have Paul Rollinson, President and CEO of Kinross, and Chris Taylor, President and CEO of Great Bear Resources. From Kinross, we also have our senior leadership team, Andrea Freeborough, Paul Tomory, and Geoff Gold. From our geology team, we have Graham Long, Senior Director of Greenfields Exploration for North America and Europe, who's been our principal geologist on this file since 2018. Claude Schimper, Senior Director of Resource and Mine Geology, who has extensive global experience in underground geology, including at Hemlo. Finally, with us from Great Bear Resources, we also have Calum Morrison, CFO and VP Corporate Development. Before we begin, I'd like to also state that we will be making forward-looking statements during this presentation.
For a complete discussion of the risks and assumptions which may lead to actual results differing from estimates contained in our forward-looking information, please refer to page two of this presentation, our news release dated December 8, 2021, and our most recently filed AIF, all of which are available on our website. I will now turn the call over to Paul.
Thanks, Chris, and thank you all for joining us today. A very special welcome to Chris Taylor. We are excited to discuss with you today our agreement to acquire Great Bear Resources, which owns 100% of the Dixie Project, a high-quality development project in the renowned Red Lake mining district in Canada. Over the past several years, we have reviewed hundreds of opportunities, including every opportunity in Canada, and we believe that this is an excellent transaction for our shareholders. This morning, I'm going to highlight the key terms of the agreement, walk through the strategic merits of the deal, and briefly describe the asset and how we see development moving forward. Paul Tomory will provide a technical overview of the project.
The transaction involves upfront consideration of approximately $1.4 billion, comprised of 60% cash and 40% shares, with shareholders of Great Bear having the option to increase the cash component to 75% subject to proration. In addition, the transaction includes a contingent payment payable in Kinross shares having an approximate value of $46 million, triggered by reaching commercial production at the Dixie Project and the declaration of at least 8.5 million ounces of M&I resources by the time commercial production is reached. The board of directors for both Great Bear and Kinross have unanimously approved the transaction. Dixie is a top-tier discovery with a clear path to becoming an operating mine, with substantial exploration potential beyond that.
We've been looking at this Asset since 2018, and with recent confirmation of our views on Dixie's potential, we believe now is the time to bring the Asset into our portfolio. Based on our extensive due diligence and the drilling completed to date, we are confident that our purchase of Dixie is well justified by our vision for a high-quality open pit on its own. In addition to this, we believe significant value remains to be unlocked through future exploration drilling, particularly in the underground extensions below the open pit. The exploration results to date from over 700 holes and 340 km of drilling suggest a prolific gold system that remains unconstraine and open to expansion, with over 80% of the property still unexplored.
In our view, the LP Fault Zone mineralization shows many similarities with Hemlo, which has produced tens of millions of ounces over a multi-decade period. At this stage, we also see potential for other mines on the property similar to LP, as well as Red Lake-style deposits in the hinge and Limb. In terms of location, Ontario is a highly attractive and stable mining jurisdiction, and the Red Lake mining camp is an established district with access to skilled labor and a significant regional infrastructure. Furthermore, with our head office in Canada, we have significant tax pools that we expect to apply to the future operation, which enhance project returns. This project plays to our strengths as we can leverage our project development, open pit and underground expertise, as well as our proven track record of operating top-tier assets.
Dixie will be an excellent fit, and we are excited about its potential to become a cornerstone asset that is expected to support our longer-term production. I'll now turn the call over to Chris Taylor to provide his comments on the transaction.
Thanks, Paul. The acquisition of Great Bear by Kinross is an excellent opportunity for all stakeholders.
These guys will be an exceptional steward for the Dixie Project, continuing the long-term partnership with the Wabauskang and Lac Seul First Nation that we've developed and the other local communities. Not only will Great Bear shareholders benefit from a compelling premium, but we also have the opportunity to continue to participate in the future potential of Dixie in the hands of Kinross, while also gaining exposure to Kinross's diverse portfolio by way of the Kinross shares that we will receive. Now, Kinross is unique among its peers in offering increasing production and cash flow growth in the coming years. I'm personally happy to become a shareholder at this time and see the company add the Dixie Project as a potential long-term, high-quality operation. The Kinross team, very impressive.
They have the technical open pit and underground expertise and development capability and financial strength to advance Dixie as a top growth priority. I'm excited at the potential for it to become a Canadian centerpiece Tier I asset for the company. As you're gonna hear from the Kinross team today, further exploration of Dixie will be a significant focus for Kinross and will fit nicely into Kinross's development portfolio. I am confident that as Kinross unlocks potential and maximizes the project's value, Great Bear shareholders will be exposed to the project's future success through contingent consideration and the Kinross shares. As Paul noted in his remarks, the Great Bear board of directors unanimously supports the transaction, and we have voting support arrangements from all the directors and officers and certain significant shareholders.
Thanks, Chris. In terms of advancing the asset, we plan on pursuing three objectives in parallel. First, we expect to undertake an extensive exploration program at the LP Fault Zone, including 200,000 meters of planned drilling in 2022. We also expect to start drilling to support permitting and development of an initial high quality, high grade open pit mine. Second, we will continue exploring beyond the upper portion of the central area of the LP Fault Zone by stepping out along strike, along the strike extents, and also following mineralization as it continues at depth. Third, we will opportunistically explore the high grade Red Lake-style deposits as well as other high potential new discoveries, such as Midwest. As large stretches of the property have not yet been fully explored, we believe there is significant untapped potential.
In summary, we envision a large, long life, multi-deposit mine complex with a quality initial high grade open pit that has the potential to be a centerpiece asset for years to come. While the majority of the consideration for this transaction is cash, our payment does include shares. It's worth noting that our preference would have been to pay entirely with cash. However, Great Bear management sees compelling value in Kinross shares and wanted to include equity as part of the consideration. I would point out that we have the financial capacity to enhance our capital return program, which would help offset the shares being issued. With respect to the cash portion, our balance sheet is strong, and we are in a good position moving forward.
In the 60% cash consideration scenario, we would be paying approximately $850 million in cash and the remaining $570 million using shares. If we assume the maximum cash payment scenario of 75%, the cash portion would become approximately $1 billion. At closing, our intention is to finance the cash portion with our existing liquidity, which as of September 30 included $586 million and a $1.5 billion revolving credit facility. As a reminder, at the end of Q3 2021, our total debt was $1.45 billion, and our net debt to EBITDA ratio was under 0.5x .
We expect to generate significant free cash flow in the coming years, and we are in an excellent position to repay our debt while continuing to pay our dividend and repurchase shares. In today's gold price environment, we expect our initial pro forma net debt to EBITDA would remain below 2x and would decline to around 1x by the end of 2022 as our production ramps up through the second half of the year. In line with our widely recognized sustainability practices, we will follow a Do No Harm strategy throughout the life cycle of this asset to minimize the effects on the environment while making positive contributions to the community. This project is located in a low greenhouse gas energy grid, and we expect a potential operation at Dixie could lower Kinross's overall emissions intensity.
I have had the opportunity to meet the chiefs of the Wabauskang and Lac Seul First Nation who have traditional territorial claims in the area. We look forward to continuing to build on the established strong relationships, and we will work together to ensure that we honor indigenous rights so that the project delivers sustainable benefits to their communities. In addition, we will look to leverage the strong mining culture in Red Lake in the Red Lake region to continue delivering benefits to the broader community. I'll now turn the call over to Paul to provide more detail on the asset.
Thanks, Paul. As mentioned, the Dixie project is located in the renowned Canadian Red Lake district with excellent access to local infrastructure. Approximately 25 km east-southeast of the town of Red Lake and consists of more than 91 sq km of contiguous claims that extend linearly over 22 km, leaving significant room for additional discovery. A paved highway and provincial power line run parallel to the project, and the property hosts a network of very well-maintained logging roads that facilitate access. Dixie is a relatively recent discovery, and we've been actively involved in diligence on the property since 2018. We believe that Great Bear has an exceptional team of exploration geologists that have made a camp-scale discovery at Dixie. The Great Bear team has conducted their geologic work to a very high standard.
For example, their work was based on 100% oriented core, enabling accurate modeling of estimation domains with precise knowledge of the intersection. 100% use of multi-element coverage, enhancing confidence in metallurgical assumptions, and helping us refine our own geological model. Very robust logging, sampling, QAQC, and data storage procedures, giving us a high degree of confidence in the integrity of data. Lastly, initial metallurgical results for recovery, which have been consistent and positive. Looking forward, we see the potential for a robust, high-quality, high-grade open pit mine at LP. We expect this initial pit will be based on approximately 2 km of strike down to a depth of approximately 400 m identified along the LP fault corridor that has been confirmed with initial drilling over 10.8 km.
LP remains open across the entire property, and drill results indicate it remains open at depths below 750 m, which gives us a long runway to continually grow the resource over time. With this, we see camp-scale potential of LP that will likely take time to define, but could potentially extend production for years, and hopefully decades, beyond the initial open pit and as mining transitions to substantial underground operation. To be specific on that point, we will plan our initial mill to be sized for an ultimate transition to underground. The following images provide some additional perspective on the spatial characteristics of the LP zone. In the gray fixed thickness along section on the right, you can see that the gold mineralization is very continuous across strike and down dip and remains open. You'll note the average grades and true thickness we are working with.
Keep in mind, this is only one of the 14 stacked lenses in this section. Looking at the cross-section on the left, you can see that the stacked nature of the mineralized zones, which range from 10 m- 20 m in thickness and aggregate to total mineralized widths of 200 m-400 m over km of strike length. The nature of these stacked lenses implies a high ounce per vertical meter. In addition, we see numerous similarities between LP and the Hemlo deposit, which has produced more than 20 million ounces of gold and has been operating continuously for more than 30 years. Both deposits are hosted in meta-felsic volcanics. They share the same metamorphic grade. They occur at flexures along major regional scale structures, show evidence of deep-seated fluid flow, and manifest as a series of stacked lenses.
Expanding on this comparison, the LP Fault Zone has a 4.6-km strike length thus far, starts very close to the surface and extends locally down to a vertical depth beyond 750 m This is what makes the Dixie property special, as this style of mineralization is not typical of the long history of the Red Lake gold camp, but rather more analogous to the Hemlo camp near Marathon. Further, across all zones, Great Bear has reported that over 80% of the drill holes contain visible gold, which underlines the significant scope and robustness of the mineralized system. We also like the potential to high-grade limit hinge discoveries and view these as Red Lake Campbell-type opportunities. Finally, within close proximity to these primary zones are the newly discovered high-grade Midwest and Arrow targets that also represent potential for future growth.
The regional potential of the 91 sq km property has yet to be tested for similarly prospective deposits. To reiterate, this discovery, while already substantial, is still early, and we are extremely excited to get to work drilling it out over the coming years. With that, I'll turn the call back to Paul.
Thanks, Paul. In conclusion, the agreement to acquire Great Bear illustrates our commitment to long-term growth from high-quality assets and our ability to strategically execute on our M&I vision. We are excited about bringing this compelling gold discovery into our portfolio. We see considerable value in what's already being drilled at Dixie. We are even more excited about the long-term potential for this to become a top-tier producer with a long runway for resource growth, driving long-term value for our shareholders. We remain fully committed to our plan to produce an average of 2.5 million gold equivalent ounces per year over this decade and believe that Dixie will be a cornerstone project in an excellent jurisdiction, supporting our production profile by further strengthening our robust long-term outlook. With that, operator, we'd now like to open up the line for questions.
At this time, I would like to remind everyone, in order to ask a question, please press Star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Tyler Langton with JP Morgan.
Good morning. Thanks for taking my question. I guess, you know, to start, Paul, you mentioned sort of the exploration activities that you're gonna look at in 2022. I don't know if it's still too early and, you know, maybe depending on the results of the exploration, but do you have a rough sense in terms of, you know, how long to get, you know, sort of in resources or, you know, and then, you know, ultimately sort of a technical report and investment decision? Just trying to get a little bit more details on potential timing.
This is Paul Tomory. Our focus over the next year is gonna be a pretty extensive drilling program. We're targeting a budget in the $50 million-$60 million range, and we will focus on both infill drilling in the LP zone, as well as continuing some of the exploration work across the broader property. Our goal is to have a resource in place on an open pit, which would form the basis of our first study. Strategically, the way we're looking at this is we see four big buckets of opportunity. One is the LP open pit. The second would be an ultimate transition to an LP underground. Looking at the Hinge and Limb, the more Red Lake style mineralization as an underground and then further afield, so four key buckets of opportunity.
The first resource that we put out would be on that LP open pit and potentially some of the underground as well. It would not represent the full extent of what we see on the property. I'm not gonna put a date on that yet, but we've got about a year of drilling ahead of us, and perhaps a year in 2022 would be a good number for our first resource. I reiterate, that would just be the open pit and potentially some of the underground at LP. You asked about a PEA. We wanna do the drilling first, so that we can get tighter drill spacing to get to an indicated level of confidence.
At that point, we would initiate studies on a PEA on the LP open pit, and that would be followed up in subsequent quarters and years with additional studies on potential further extensions of mining. We do have initial estimates on what an LP open pit might look like, but of course, we got to do a fair bit of work on infill drilling here. I've covered a lot of ground there, but I think I've answered your question in there.
Yeah, no, that's very helpful. Thanks, Paul. I guess just, you know, as a follow-up, and again, I know it's early, but you mentioned sort of the CapEx for the mill was kind of, you know, but does not take into account the underground. I mean, do you have, you know, a rough sense, you know, for the CapEx, you know, sort of, you know, of this project? Either, I don't know if, you know, initial CapEx for the open pit or sort of just longer term just, you know, sort of rough numbers in terms of, you know, how you're thinking about it.
Most attractive thing from a project development point of view of this asset is the location. It is right there beside the highway, beside the power line. There will be significant capital development synergies and leveraging this off an established district. In Canada these days, you can't really build much for under $1 billion, but because of the proximity to infrastructure, we see some upside to get below that billion-dollar number. What we've done to date is obviously very high level estimates, but some number under $1 billion, a pretty good start.
Great.
In terms of-
Thanks so much. Oh, sorry, go ahead.
Yeah, you asked about the mill. This is a high grade open pit, so we're not talking about a mill in this 20,000 tons-40,000 tons a day range. That's too big. We would want a mill that could later accommodate bulk tonnage, perhaps panel cave type underground operations. We're very conceptually targeting a mill in the 10,000 tons-15,000 ton a day range.
Perfect. Thanks so much.
Your next question comes from the line of Josh Wolfson with RBC Capital Markets.
Thank you very much. Paul, you mentioned there is a clear path for the assets to become an operation. You know, when you consider the, you know, the extensive timeline, you know, was just discussed for an initial resource, economics, permitting, construction, you know, what sort of timeframe should we think is being realistic for initial production?
Yeah. I don't know if you want, Paul Tomory, but Paul, you wanna?
Yeah. Josh, we're gonna have multi-track development plan here because I think this is a really important point. There are multiple deposits on the property. The first project, if you wanna call it starter project, but even if it's not really a starter, it's a pretty substantial mine, would be the LP open pit. We would seek to infill drill that and then get going on a scoping level study, moving to PFS/FS. Concurrently with all that, we would begin very early with engagement with local stakeholders. That's gonna be an important part of our development plan, getting into permitting in Ontario, you run concurrent permit and study processes.
We're really looking at getting going on a scoping study one year from now and then probably 2.5 years of PFS/FS, 2-2.5 years of construction. A good first production guess at this point would be 2029, end of the decade.
Okay. I think, you know, given the early stage of the project and, you know, having seen some acquisitions in the sector which have, you know, in particular Red Lake, I know this asset's different, but not having materialized as hoped, and obviously given the performance of the stock recently and the premium that's paid, you know, what gives you this level of comfort to make this size transaction at this time, you know, with the uncertainty and the long timeline to head towards production?
Look, I'll start with that. I mean, it again, yes, we don't have any kind of resource at this point, given the earlier stage. As I said, we've got 700 drill holes and 340 km of drilling. You would've seen in that long section that we put into the presentation, there's a lot of drilling. There's great continuity, great grades. You know, we can't give you a resource, but the tools are certainly there from a strike with depth grade perspective to get a sense of what would come out of a potential open pit there. We believe that that open pit alone more than justifies this transaction with all the upside to follow.
Josh, what gives us a lot of confidence, given the early nature of the asset here, is that mineralization is highly consistent. The grades and the widths that are seen in the drill data are very consistent. There's also an almost remarkable lack of faulting and diking in the deposit, which gives us a lot of confidence in the potential continuity of mineralization. Another important factor here is that I suppose for decades, people have been looking for Red Lake and Campbell style mineralization in that camp. What Great Bear has discovered here, in addition to the Red Lake Campbell style mineralization in the Hinge and Limb deposits, they have found a completely different style of mineralizing system for that area. Which is more analogous to, as I said in my prepared remarks, to Hemlo.
We view that as of lower geologic continuity risk than, say, would be a typical Red Lake Campbell deposit, where continuity might be called into question given the past experiences with other developers in that camp.
Great. Thank you very much.
Your next question comes from the line of Greg Barnes with TD Securities.
Thanks. Thank you. First off, I guess for Andrea, can you give us an idea of what your tax loss carryforwards actually are in Canada?
We've got about $1 billion of tax losses. We disclosed that, so tax losses in Canada. There's an expiry date associated with those. You know, through tax planning, we expect we'd be able to refresh those. We should be able to use them, all those tax losses once it's in operation and generating revenue.
Okay. Just as a signpost, you've mentioned in the 8.5 million ounces as a minimum that you want an M&I before you would pay the contingent payment. Is that just in the LP zone or the central LP zone? Does that incorporate other zones into that M&I resource across the entire property?
It would encompass everything, Greg. The 8.5 million, the sort of mystery behind how do we land on 8.5 was, if you look at the current sell side consensus average for resources, that is the number, 8.5. We just felt it was a good sort of flag on the hill to just remind people, particularly those that aren't familiar with the story, what some of those you know sell side consensus research targets are. It was a reasonable place to put a pin in for a contingency.
Well, I don't see those reports. I haven't seen them. Is that 8.5 million based purely on the LP zone or is it a bigger number that people are assuming in their calculations?
Well, I'll speak to that a little bit. It's Chris from Great Bear. The LP zone by itself, I think, these guys were making the Hemlo analogy, and I know Hemlo is not intimately familiar to many in the analyst community at this point because it's been in production for so long. But that deposit's produced about 23 million ounces of gold so far over about 2.6 km of strike length. It averages about 8 m wide of just about 8 g. It has a smaller mineralized footprint than what we have at the LP fault by itself. The LP fault so far, we're looking at about 4.4 km-4.5 km of continuous mineralization that we're doing a grid program on now.
I view that over the long term, the potential just within the LP target by itself would be greater than that number, and that's what the analyst community is also projecting.
I think just to be clear, I think, Chris, I would say the 8.5 does come from the LP, and doesn't even get into the broader potential of the property.
Yeah. The other zones would be on top of the Red Lake style mineralization.
Great. That's very helpful. Thank you.
Your next question comes from the line of Mike Parkin with National Bank.
Hi, guys. Just wondering if you thought about any of the regional milling capacity as an alternative to building your own standalone. I guess kinda having something closer to where this is probably makes more sense, but thought worth asking.
Yeah. The local capacities are, in the case of these established camps, pretty well, they're used. I know what you're talking about. The more a further away mill. But given the scale of the mill that we're talking about here, 10 tons-15,000 tons a day, given the need to have this pretty close to where the mine would be, we are looking to build our own mill and fit for purpose. We wanna customize this mill to our own technical standards. Also, that we view this development as an opportunity to showcase some good ideas on innovation and ESG from a building it from the ground up. We are looking at this as our own set of infrastructure.
We like the idea of having this and building it to our standards, and I think we've got enough lead time here to make this, you know, a Tier 1 example of what you can do, you know, in terms of, you know, new technology, environmental, and you know, take it and develop it on our own with our own standards and the latest technology.
Fundamentally, given the open pit, the scale here is different than anything in the area.
Yeah, true. Very true. All right. Thanks very much, guys. Looking forward to updates on it. All the best with it.
Thanks, Mike.
Once again, if you would like to ask a question, please press star then the number one on your telephone keypad. Your next question comes from the line of Mike Jalonen with Bank of America.
I think it's close enough. Hi, Paul, Chris, Paul, and Andrea. Just following up on Greg's question, 'cause I guess I must have fallen off the research distribution list of the analysts who covered Kinross. I don't know why. Such a nice guy. What grade would they have used for that 8.5 million ounces? Since you guys are using that, maybe the grade is accurate too.
Yeah. I'll take that question. I mean, there's really... It is an interesting system. It's an interesting series of deposits. It's probably the best way to understand it. You know, ultimately, underground, you'd probably be looking at a grade in excess of 8 g It'd be over 8 g from what we're seeing, and I think we're all looking at that. Like, you're not stretching to low cutoffs. You know, we'll talk about all that in the future, but it's genuinely high grade in the 8-g-plus level. In the pit, the important point is that grade goes right to the bedrock surface.
Literally, the only reason that this wasn't found many, many years ago is there's a thin layer, sometimes 2 m, sometimes 20 m of gravel that cover the bedrock everywhere. But the high-grade gold goes right to the-
The bedrock surface over literally kilometers of strike length. Around that, you get this wide halo of lower grade mineralization. That's what they were talking about at the beginning here, is that, sometimes we see up to 200 m, sometimes 400 m of, like, disseminated low-grade mineralization. In the middle of that, you get anywhere from a few meters to 20+ m of high grade. It's really that composite material. What's the grade? Well, in the pit, it would legitimately be a high grade open pit, and it depends how these guys end up modeling it, what the mill capacity is and everything else. When they say high grade open pit, that's not a stretch. It really will be.
You're looking at going in and accessing that high grade, you know, 8 g plus sort of material underground. Genuinely a high grade discovery, you know, genuinely big scale. It'll be up to these guys to optimize what sort of throughput grade they wanna see in the mill. Paul will probably have a lot of fun talking about that over the next short term here. You know, what would you guys say, looking at the initial data?
Well, you're quite correct on the grade in the underground, the high grade zones. In our pits, we would obviously look to pull some of the lower grade halo as well. The throughput grade would be lower than that, but still quite high compared to any open pit you may wanna look at. Not unreasonable to think of grades in the three-four range, I think, in an open pit scenario. That's for the open pit. The underground grades will be higher.
Yeah, because I've visited Hemlo multiple times, and the open pit at Williams is what, 0.2 g, 2.5 g, maybe even thee. Does that sound accurate in that range, like you just said?
Well, the Hemlo, I think they ran about 1.5-g open pit component, but it was only a very small portion of the total mineralization. Out of 23 million ounces produced, there was only about 1.5 million in the open pit. This project is different because the mineralized system is wider. It looks like Hemlo mineralization. It's very predictable. It's sheet-like. It's not like tubes or pencils going down to depth. It's like broad sheets. Sometimes they're hundreds of meters, sometimes more than 1 km in strike length, and they're really highly continuous. That's like Hemlo, but the scale of it is quite different. If you look at it in a cross-section, you're not looking at something that's typically 7m or 8 m wide. You're looking at a total mineralized system that's up to hundreds of meters wide.
Similar geologically, but dimensionally much bigger.
Okay. Thanks for that, Chris. Chris, just one last question for you. Your presentation, the last one, said a 43-101 report was coming out in early 2022. Sounds like, is that still coming out or are we waiting now year-end 2022 for initial resource?
I think these guys are probably gonna wanna handle that at this point in time. You know, we're all very optimistic about how that comes about. Effectively, like, you know, the project, what the analyst community, what Great Bear, and what Kinross believe, like, we believe this is going to be a Tier I type deposit and/or series of deposits. It's basically a mine complex. We're trying to emphasize that on the call, but there's multiple zones beside each other that we, you know, these are gonna turn into multiple deposits. I mean, it's up to these guys when they wanna release that. You know, they're putting a big exploration program into it this year, lots of meters drilled and, you know, it won't be long.
Like, they have the ability to unlock this thing rapidly, and that's what gets me excited. Like, I'm actually, you know, I've been very happy to be a Great Bear shareholder, like all of our shareholders, and very optimistic about that, but with Kinross taking on this project, we're very happy to be Kinross shareholders, 'cause what they're gonna be able to unlock here with their technical team, it'll be efficient, it'll be quick, and you'll see some really exciting stuff coming out in the near term.
Mike, I'm just gonna add a couple comments on our path to resource here. You know Kinross' DNA, we do our work, and we wanna get it right. The focus, as I said, is a pretty big infill program over the next year, and that will be the initial resource. That's, I stress, it will be the initial resource focused on an LP open pit, but there's gonna be more to come beyond that. Like I said, you know our DNA, we do our work. We have a rigorous, you know, technical approach. We do all that in-house, and we're gearing up for a pretty big drill program over the next 12 months.
All right. Well, thank you for the comprehensive answers, and good luck.
Thank you.
Yep.
Your next question comes from the line of John Tumazos. Please state your company name.
Thank you. It's John Tumazos for Independent Research. Congratulations to the Kinross team. Now, if I think I've heard everything right, you said the LP faults at least a 2-km open pit and then to 700 m, and I thought I heard 3-g or 4-g open pit milling target. You've got a pretty good thumbnail sketch. What's keeping you from declaring an inferred resource? If you put width on that, you've got a mineral envelope. It sounds like the maiden resource could be over 5 million ounces. Am I hearing all the dimensions right?
The pit is not quite that deep, like I said, in our preliminary model, we're looking at a pit 350-400 deep. Why are we not declaring an inferred resource? Partly, we wanna do our own work over the next year. The drill density is good, but we wanna make it more consistent across the LP Fault Zone. Great Bear has done an exceptional job on exploration drilling, focusing on the property and target identification. There's a generational step taking place right now with this asset as it moves to a better understanding of the potential resource and the potential mineability. That's what our focus is, the infill program right now. We're not in a rush to put out a resource.
We wanna do the infill work, we wanna understand the optimization between an open pit and underground, and that will also drive where we have our resources, 'cause the way we look at an open pit versus an underground resource will be different. That'll all be part of the work over the next year.
Once again, I'm putting myself in the shoes of your evaluation team and board. My hunch is that you have a resource number conceptually in-house that maybe isn't good enough to publish yet and you wanna verify. In your own analysis, what top cut factors are you using? Are there any other geotechnical constraints that you would apply?
I'll pass that on to Nicos Pfeiffer, for our resource geology lead.
Sure. We've kind of looked at multiple top cut factors. What really matters here is there's a great deal of visible gold in the system, and, you know, we see it everywhere. How you constrain that, how far you let that spread, you know, can really move the needle. That's another reason for just taking our time, getting the infill in place, getting some tighter drill spacing to understand how far that spreads. That's the real goal here.
You're taking your time to have a better quality resource with more infill drilling, more data.
Yeah, we don't wanna come.
On spread, smearing the area of influence.
Exactly. We don't wanna come out of the gate with something that's inferred and, you know, maybe half-baked when we can do the work properly in-house and deliver something that's quality.
John, we're not buying this for the initial resource. That's gonna be one step along the journey. We're buying this for the camp scale potential that we see in this property. Another point is Kinross does our own technical work. When we bought other assets, we actually, in the case of the Russian asset we bought a couple years ago, we did our own drilling during the diligence period. Here, we didn't do that. We just wanna build our models and bring everything in line with the Kinross standards. We're not in a rush to put out a resource.
Thank you.
Your next question comes from the line of Tanya Jakusconek with Scotiabank.
Buddy, thank you for some of the details, and maybe if I can just circle back, just missing one other portion. It's just on the costing side. Maybe Paul Tomory, can you just give us a bit of an idea of, you know, if you can, on a strip ratio and, you know, just back of the envelope numbers, is a $600-$800 per ounce all-in sustaining cost something reasonable for this open pit?
That's very reasonable.
Okay.
Strip rate will be determined by our cutoff grade in the pit.
Mm-hmm. Okay. Okay, that's helpful. Thank you. Maybe as we look at the project and we said the end of the decade, coming in, maybe Paul Rollinson, can you kind of walk us through your priorities of your project pipeline, how this would fit in with Lobo Marte, Chulbatkan, et cetera, so that we understand the capital spend over this period?
Sure. Look, I think the timing is actually quite ideal. We won't be taking our foot off the gas on any of those other projects. We certainly have the technical bandwidth capacity. We have the financial capacity. This will be a highlight in our portfolio. It will be a priority, but it will not detract from the other development projects that we're working on.
Okay. You don't
And-
Sorry, go ahead.
Within the case of Lobo Marte, our development timeline is tied to how much further potential we get at La Coipa. The more we get at La Coipa, the more we'll push out the Lobo Marte timeline. We just signed our first agreement with Codelco on the JV. We've got a life-of-mine extension already happening at La Coipa. Lobo will be tied to La Coipa.
Okay. If you had to prioritize, you would have La Coipa, which is coming in, you would have this one, Russia, and then sort of Lobo Marte would be sort of the one you'd move around if you had to?
It's the furthest out, yeah.
Yeah. Okay. Maybe if I could ask about just shareholder returns. You talked about maybe accelerating your, you know, share buybacks. Can you talk a little bit about, you know, if we go to the maximum and, you know, that 96 or whatever million shares are issued on the Kinross side, how do you see, you know, buying those back? Like, can you kind of give us an idea of what you're targeting or how do you see that play out?
Okay, sure. Just to refresh, I mean, we're doing $150 million a year on the dividend and about $150 million a year in the buyback. We've obviously modeled sensitivities as to our, you know, financial capability to, you know, increase that. We're quite comfortable. I don't wanna get into specifics today, but when you look at our go forward cash flow this year, growing next year, growing, we've got more than enough capacity to, you know, effectively turn this into a cash transaction.
Okay. That, that's helpful. Thank you.
At this time, there are no further questions. I would like to turn the call back over to Mr. Paul Rollinson for closing remarks.
Well, thank you. Thank you, Lisa. Thank you everyone for joining us. I'm sure we'll be talking to many of you in subsequent one-on-ones, but thanks for joining us and we will be in touch. Thank you.
This concludes today's conference. You may now